The appellant's barge sank while chartered to the respondent.
The appellant's insurers paid out the loss and initiated a subrogated negligence action against the respondent.
The respondent sought to rely on a waiver of subrogation clause in the appellant's insurance policy, which explicitly extended coverage to charterers.
The Supreme Court of Canada held that the respondent, as a third-party beneficiary, could rely on the waiver of subrogation clause to defend against the action.
The Court applied the principled exception to the privity of contract doctrine, finding that the parties intended to extend the benefit to the charterer and that the charterer was performing the very activities contemplated in the contract.
